A sharp pullback in spending by cities and states on infrastructure—from highways to sewage systems to police stations—is weighing on U.S. economic growth.

Such government austerity is unusual in the eighth year of an economic expansion, and it is acting as a headwind for economic expansion just as the worst effects of the energy-industry bust, a strong dollar and inventory drawdown are fading.

The decline in state and local investment depressed gross domestic product growth this spring and was on track to weigh on economic growth again in the third quarter.

With the U.S. labor market at or near maximum employment, assessing trend job growth has become increasingly important. This “breakeven” rate, which is the pace of job growth needed to maintain a healthy labor market, depends primarily on growth in the labor force. Estimates that account for population aging and potential labor force participation trends suggest that trend growth ranges between about 50,000 and 110,000 jobs per month. Actual job growth has been well above this pace, implying that it can slow substantially in the future without undermining labor market health

Not least is the benefit to Social Security and other entitlement programs: in contrast to the population of labor-force age in Japan, Germany, Italy, and the United Kingdom—countries with generally older populations, lower fertility, and lower immigration—the U.S. labor-force-age population is projected to grow more than five percent between 2010 and 2030. Yet were it not for new minorities, the country’s labor force would decline by eight percent. Moreover, within the labor force, new minorities add needed youthfulness that brings with it innovation and an entrepreneurial spirit. Projections of the labor force show that in 2030, 54 percent of new minorities will be under age 40, compared to well under half of the rest of the labor force population.